« previous next »

Author Question: Economists argue that the corporate income tax is an example of a tax with a high deadweight loss ... (Read 68 times)

jwb375

  • Hero Member
  • *****
  • Posts: 540
on: Jun 29, 2018
Economists argue that the corporate income tax is an example of a tax with a high deadweight loss because
 
  A) it encourages corporations to seek ways to evade taxes.
  B) taxing a corporation's income amounts to double taxing the earnings on individual shareholders' investments in corporations.
  C) some of the burden of the tax is passed on to consumers in the form of higher prices.
  D) it discourages corporations from undertaking capital investments to enhance market competitiveness.

Question 2

Consider two industries, industry W and industry X. In industry W there are five companies, each with a market share of 20 of total sales. In industry X, there are six companies.
 
  One company has a 50 market share and each of the other five firms has a market share of 10.
 
  a. Calculate the four-firm concentration ratio for each industry.
  b. Calculate the Herfindahl-Hirschman Index (HHI) for each industry.
  c. What do the values of the two concentration measures imply about the degree of market power in the two industries?
 
  Figure 15-18
InMicro ¦ Hubbard, O'Brien ¦ 1st Edition
Buy Test-Bank


ansleighelindsey

  • Sr. Member
  • ****
  • Posts: 364
Reply #1 on: Jun 29, 2018
Answer to Question 1

B

Answer to Question 2

a. The concentration ratio in industry W =20 + 20 + 20 + 20 = 80. The concentration ratio for industry X = 50 + 10 + 10 + 10 = 80.
b. The HHI for industry W = 400  5 = 2,000 and the HHI for industry X = 2,500 + (100  5 ) = 3,000.
c. Both industries are highly concentrated. Although the concentration ratios are the same for each industry, market power is more significant in industry X. The ability to raise prices is greater in industry X.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

If all the neurons in the human body were lined up, they would stretch more than 600 miles.

Did you know?

Cutaneous mucormycosis is a rare fungal infection that has been fatal in at least 29% of cases, and in as many as 83% of cases, depending on the patient's health prior to infection. It has occurred often after natural disasters such as tornados, and early treatment is essential.

Did you know?

The first war in which wide-scale use of anesthetics occurred was the Civil War, and 80% of all wounds were in the extremities.

Did you know?

Though methadone is often used to treat dependency on other opioids, the drug itself can be abused. Crushing or snorting methadone can achieve the opiate "rush" desired by addicts. Improper use such as these can lead to a dangerous dependency on methadone. This drug now accounts for nearly one-third of opioid-related deaths.

Did you know?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

Hair loss due to DHT Hair loss due to DHT
Four Brain Structures with High Myelination in Early Childhood Four Brain Structures with High Myelination in Early Childhood
Client’s view with visual field loss Client’s view with visual field loss
Effect of dietary fats on high- and low-density cholesterol levels Effect of dietary fats on high- and low-density cholesterol levels
Loss of brain cells in a transgenic Huntington-disease mouse. (a) Section of normal mouse-brain stri Loss of brain cells in a transgenic Huntington-disease mouse. (a) Section of normal mouse-brain stri
Introduction to Corporate Finance, 5th Introduction to Corporate Finance, 5th
Video: Coaductile pathway, Timing of contraction signal & Conduction system and ECG

For a complete list of videos, visit our video library